The TJX Companies Inc.
) has raised its third quarter and full year 2014 guidance. It
also announced its store expansion plan and introduced its long
term earnings and top line growth target.
Third Quarter and Fiscal 2014 Guidance Upped
For the third quarter of fiscal 2014, TJX now expects earnings
per share to be in the range of 73 cents to 74 cents higher than
the previous outlook of a range of 69 cents to 72 cents. The
guidance is 18% to 19% increase over the prior year earnings
reported by the company.
TJX now expects third quarter comparable stores to grow by 4%
compared to a growth range of 2%-3% expected previously. The
company had reported a comp growth of 7% in the prior year
Following the increase in the third quarter outlook,
management raised its expectations for the full year. For fiscal
2014, TJX now expects earnings to be in the range of $2.78 to
$2.82 higher than previous expectations of $2.70 - $2.78.
The guidance reflects a 13% to 14% increase over the prior year's
earnings of $2.47. The outlook excludes benefit from the 53rd
week in the fiscal 2013 calendar. TJX maintained its
fourth-quarter earnings guidance of 77 cents to 80 cents a
Store Expansion Policy
TJX is scheduled to host an investor day in Framingham, Mass
today. It will discuss increased opportunity for its stores in
current markets in the conference.
TJX has an aggressive store opening policy. It is regularly
opening stores and expanding speedily across the U.S., Europe and
Canada. Total number of stores grew from 2,905 in fiscal 2012 to
3,050 in fiscal 2013. During its second quarter earnings
conference call TJX announced that it aims to open 3,200 stores
by the end of fiscal 2014, which is 50% higher than the current
store count of the company.
TJX is focusing on long term store growth and is geared to
expand its Marmaxx division stores in the U.S. by a greater
number than it had previously estimated of store growth range of
2400-2600 stores. Store remodeling and new stocks have led to
strong comps gain of 4% backed by 3% growth in apparel comps and
5% growth in home fashions. The company also expects to exceed
its target of increasing HomeGoods store count by 750-825 stores
in fiscal 2014.
TJX is also putting greater focus on its performance in
Europe. It plans to achieve a 10% profit margin compared to 8%
margin targeted earlier. The company unlike its peers have been
performing consistently well in Europe despite the ongoing
macroeconomic headwinds in the region. It plans to open 750 to
875 stores in Europe by fiscal 2014.
Introduced Long Term Targets
TJX plans to maintain earning per share growth of 10% -13% for
the next three years. TJX aims to maintain a top line growth of
6% to 7% backed by 2% comps growth, 4%-5% square footage growth,
1%-2% segment profit margin expansion and 3%-4% from TJX's share
We are encouraged by the optimistic outlook of TJX Companies,
which carries a Zacks Rank #2 (Buy) and we remain confident that
the discount retailer will meet its long term growth targets if
it maintains its current business momentum for the coming
Slow recovery of the U.S. economy, coupled with high debt
crisis in the European countries has compelled the consumers to
shift from high-end products to low-priced goods. Accordingly,
discount stores, like TJX companies,
Dollar General Inc.
) are witnessing top-line growth even during recessionary times
as they offer branded clothing at discounted prices.
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